Ten years ago, the very idea of options was sufficient to motivate, but following the hard lessons learned from the tech bubble bursting, candidates take a more educated, cautious approach. The current generation of start-up veterans might be working in their second or third venture and this has led to a more pragmatic acceptance that stock options are not a ‘slam dunk’, and instead should only be viewed as a long term incentive to attract a certain profile of person into the company. Therefore it is not just Executive hires qualifying preferential shares, dilution, tax efficiency etc – these questions now come from every level.

Early stage ventures will always use stock options in remuneration; however the ability to “offset” the cash element of compensation will be limited by the individual’s base salary “pain-threshold”. When larger volumes of options come into play for Executives, options can help leverage a reduction of base salary or in lieu of a benefits package. It is important that each individual’s personal situation is considered, as a married candidate with children will have different priorities to a bachelor.

Never forget that options are not just a hiring tool, but also an important retention device. If someone is looking to leave, options can be used to help reinforce their commitment to the company. Personally owning a stake in the business remains a key factor in developing and maintaining the employees’ commitment.